XPO reaches $5.5M misclassification settlement (CA)

Posted by National Alliance for Fair Contracting on

AUTHOR: Matt Leonard
PUBLISHED: Aug. 22, 2019

Dive Brief:

  • XPO Logistics has reached a settlement with 3,772 plaintiffs in a case accusing the company of breaking California labor laws by requiring the plaintiffs to work off-the-clock without pay, failing to pay overtime and other allegations, according to a motion for settlement approval filed this past Friday by the plaintiffs.
  • The $5.5 million settlement will result in an average payout of $935.18 for each plaintiff, 1,981 drivers and 1,791 helpers, according to court documents filed in the U.S. District Court of the Northern District of California court this week.
  • The plaintiffs have requested the settlement be given preliminary approval and for the court to set a date for the final approval hearing. A proposed schedule filed by the plaintiffs lists Sept. 4 as the potential date for the preliminary approval hearing.

Dive Insight:

XPO will sometimes contract with other carriers to provide last-mile delivery services. The plaintiffs in this case were drivers and helpers for these contract carriers who allege XPO is the lawful employer in these situations because it had “extensive and pervasive control over the drivers’ and helpers’ workday,” according to the settlement documents.

The original complaint outlines various California labor laws the plaintiffs accused XPO of not abiding including unpaid overtime, not paying minimum wage, depriving contract workers of meal and rest periods, and failing to pay wages in a timely manner.

…

The plaintiff, who accepted the settlement on behalf of the class, was willing to settle because he “recognizes the risk that the Court may determine Plaintiff and the putative class were not employees of XPO,” the settlement documents read.

XPO argues that even if it was considered an employer it would be a co-employer with the contract carriers.

…

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District Attorney Krasner Announces New Labor Liaison to Bolster Protections for Workers (PA)

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by Construction Citizen | October 11, 2019

Philadelphia District Attorney Larry Krasner announced the creation of a new Labor Liaison position in the Philadelphia District Attorney’s Office (DAO) to support the Economic Crimes Unit in investigating and prosecuting crimes against workers. Assistant District Attorney (ADA) Danielle Newsome has been appointed to the position, which is the first of its kind in the City of Philadelphia.

An experienced labor attorney, ADA Newsome will focus on crimes including wage theft, purposeful misclassification to avoid payment of benefits and wages, labor trafficking, worker’s compensation fraud, and unemployment compensation fraud.

“I am proud to appoint ADA Danielle Newsome our first ever labor liaison in the Economic Crimes Unit. Her experience and knowledge about workers’ rights and vulnerabilities to exploitation will increase our ability to prosecute crimes committed against people who historically had few avenues to seek justice,” District Attorney Krasner said. “Employers have enormous power over people, particularly low-wage and undocumented workers, and must be held accountable when they abuse that power, break the law, and take advantage of the vulnerable. The addition of labor liaison ADA Newsome to the District Attorney’s Office will help us make sure workers know their rights and that employers know their responsibilities under the law.”

Prior to joining the DAO in September 2019, Newsome was staff attorney for the Health Professionals and Allied Employees Union, American Federation of Teachers (AFT), which is New Jersey’s largest healthcare union. Newsome began her legal career as an associate at the Philadelphia labor and employment law firm of Willig, Williams & Davidson where she represented a variety of public and private sector unions and individual workers. She has also worked as an organizer with unions including the United Food and Commercial Workers (UFCW) and the AFT.

“I’m excited to be in this new position and to have the opportunity to protect some of the most vulnerable workers in our city, while we send the message to unscrupulous employers that their conduct will not be tolerated,” ADA Newsome said. “Through my experience as a labor attorney and my conversations with labor leaders across the region, the need for a labor liaison in the DAO is clear. I look forward to helping more vulnerable Philadelphians secure justice with the overall goal of improving labor conditions across the city, because this kind of work benefits all workers, regardless of their industry.”

(Read More)

Lawmakers: Misclassifying workers costing millions in revenue (PA)

Posted by National Alliance for Fair Contracting on

Bucks County Reps. John Galloway, Perry Warren and other area legislators support bills that would address the problem of misusing the independent contractor designation.

By Chris English
Posted Sep 4, 2019 at 3:11 PM

Misuse of the independent contractor designation for workers, primarily in the construction industry, is costing the state and federal governments a combined total of about $300 million in lost revenue, two local state lawmakers said during a news conference Wednesday.

State Reps. John Galloway, D-140, and Perry Warren, D-31, are pushing for passage of two pieces of legislation that would address the problem. One, House Bill 716, would establish a joint agency task force on employee misclassifications. The group would investigate the practice and work toward creating solutions to reduce misclassification throughout Pennsylvania. That bill recently passed the House 198-0, Galloway said.

The other proposed bill, HB 715, would among other provisions tighten the definition of what constitutes an independent contractor to only allow use of the term if a worker’s written contract is project and time specific, with no exceptions.

Also attending the news conference, held at Galloway’s Falls office, to speak in support of the bills were Bryan Allen, chief of staff for state Rep. Tina Davis, D-141, of Bristol Township; Amy Masgay, legislative assistant for state Sen. Steve Santarsiero, D-10, Lower Makefield; and union carpenter Kevin Morrow of Perkasie.

Improperly designating workers as independent contractors gets employers out of paying health and worker’s compensation insurance. If those workers are injured, those needs are often taken care of by the state or federal governments and that places additional burdens on taxpayers, Galloway and Warren said.

Misclassifying workers also leads to the nonpayment or underpayment of state and federal income taxes, they added. The millions in lost revenue could be going toward improving schools and infrastructure and other areas, the two lawmakers said.

“This is done deliberately to cut labor costs, pay less in taxes and avoid paying our working class a fair compensation,” said Galloway, of Falls. “This is a practice that hurts the workers who are entitled to the benefits they’ve rightfully earned, their families that they work hard to provide for, and our economy.

“Employee misclassification is nothing less than theft from our families, friends, neighbors and coworkers, and it creates an uneven playing field for law abiding businesses.”

The state has laws on the books to address the problem, but they aren’t strong or detailed enough and the state Department of Labor doesn’t have enough “boots on the ground” to properly enforce them, Galloway said.

(Read More)

Construction Business Group redoubles efforts to root out misclassification (WI)

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If drywall and flooring could talk, it’d probably have a dark story to tell about Wisconsin’s ongoing construction boom. Behind projects big and small, say people close to the industry, there thrives an underground economy made up of contractors who cheat their workers out of wages and benefits to deliver projects on time and under budget.

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Indiana seeks study to collect unpaid employment taxes (IN)

Posted by National Alliance for Fair Contracting on

By Craig Lyons
May 23, 2019, 3:00 PM

Indiana lawmakers plan to probe lost revenue when employees are listed as contractors or part-time by employers to avoid additional taxes.

A legislative study committee will look at worker misclassification and how to deal with potential lost revenue to the state. A study done by the Building Trades and Construction Council estimates the loss to the state from misclassification at $400 million, but a state-authored report posited the figure is closer to $14 million to $20 million for the state and $5 million to $7 million in local income tax revenue.

…

The state says worker misclassification happens when employees are listed as independent contractors or part-time employees, which often leaves them without overtime pay, workers’ compensation and unemployment insurance.

“This is little more than payroll tax fraud committed by unscrupulous contractors who are trying to gain an unfair competitive advantage in the marketplace,” Beck said. “Payroll fraud affects every taxpayer, shrinking public budgets, and even health care costs. It is about regaining lost tax revenue and insurance fund premiums because of dishonest contractors.”

Two reports have studied worker classification, one by the Indiana Building Trades and Construction Council, and a second from the Indiana Department of Revenue and Workforce Development and the Workers’ Compensation Board.

“There are at least four state agencies in state government – the Indiana Department of Revenue, the Indiana Department of Labor, the Worker’s Compensation Board of Indiana, and the Department of Workforce Development – that have the ability to investigate and report on this subject matter,” Beck said. “What this study would do is direct these agencies to tell us how pervasive worker misclassification is in Indiana, and what we can do to combat it.”

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Dept. of Labor forces contractor to pay New Orleans laborers $180,000 back pay, follows class action lawsuit (LA)

Posted by National Alliance for Fair Contracting on

BY ANTHONY MCAULEY
MAY 21, 2019 – 2:06 PM

The U.S. Department of Labor said Tuesday it had forced a Florida-based contractor, Gomez Drywall Construction Inc., to pay 108 Louisiana-based workers nearly $180,000 in back pay for breaking federal rules on overtime compensation.

The Department of Labor said the action followed an investigation into claims Gomez misclassified workers as independent contractors and subsequently failed to pay them overtime when they worked more than 40 hours in a workweek, a violation of the Fair Labor Standards Act.

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OP-ED: CONSTRUCTION WORKERS MISCLASSIFIED AS CONTRACTORS – AN OUTRAGE (NJ)

Posted by National Alliance for Fair Contracting on

RICHARD E. TOLSON
MAY 7, 2019

‘Wealthy developers are taking advantage of labor laws and outdated regulation and enforcement to increase profit margins’

National civil rights and economic justice leaders gathered in New Brunswick late last week for the 2019 Summit for Civil Rights, and I was honored to join legendary leader Congressman Jim Clyburn on a panel at the event. It was privilege for New Jersey to host this event, but it was also ironic considering the injustices happening in our own backyard, and in plain sight.

It’s not often thought of as top-tier issue, but the gross, widespread and often crippling injustices imposed on working men and women in the construction industry in our state measure up as significant abuse and perpetuate structural inequality. While we purport to stand for fairness, all across our state, wealthy developers are taking advantage of labor laws and outdated regulation and enforcement to increase profit margins by abusing workers. And it has to stop.

These are millionaires utilizing middlemen to break state and federal laws by misclassifying full-time workers as contractors – denying them basic benefits and rights like healthcare, committing wage theft by paying below the required living wage, establishing illegal work weeks, paying cash and evading taxes – all to increase already record profits from rents and property sales.

A 2016 Stockton University report conservatively estimated that the developers are stealing more than $25 million in state tax revenue annually via these illegal tactics. But far worse, this theft involves approximately 35,000 workers who are off the books or illegally misclassified as independent contractors. An entire underground economy has been allowed to fester, all built on the abuse of workers, for the benefit of multimillionaires.

Not exactly a high-water mark for civil rights, huh?

(Read Me)

Carpenters: Industry plagued by tax fraud (MA)

Posted by National Alliance for Fair Contracting on

Picketers aim illuminate illegal employment practices

By Mike LaBella
April 11, 2019

HAVERHILL – More than a dozen union carpenters, including members of New England Regional Council of Carpenters Local 339, stood at the corner in front of City Hall for several hours Thursday morning to illuminate what they claim is rampant tax fraud tainting the construction industry.

They held picket signs and banners bearing statements such as, “Tax fraud impacts me,” and “Construction industry tax fraud costs taxpayers over $80 per second and $2.6 billion per year.”

Organizers said the event was intended to educate the public on the magnitude of illegal construction employment practices, discuss their impact on Haverhill and Massachusetts, and call for a unified front against what they called an insidious activity. Similar events took place Thursday in Lynn, Framingham and Portland, Maine, they said.

…

Local 339 issued a statement saying that each year, labor brokers and contractors cheat their tax obligations by misclassifying their hires, such as classifying a carpenter as a laborer, and paying an estimated 1.2 million workers “off the books,” (also known as “under the table”), thereby robbing taxpayers of up to $2.6 billion through lost federal income, employment taxes, and state income taxes.

Union member Adam DiGiovanni of Haverhill said he is reaching out to city officials in hopes they will support the creation of an ordinance that would penalize an employer for engaging in unfair wage practices on large construction projects that involve taxpayer money, including projects that receive tax credits.

“Other communities have passed these kinds of ordinances, including Springfield, Quincy and Lynn,” he said. “There needs to be oversight as right now it’s a free for all.”

He said that such an ordinance would typically speak to large-scale commercial construction projects valued at $10 million or more, and typically not the “local home-builder market.”

(Read More)

Bill aims to better classify California construction workers (CA)

Posted by National Alliance for Fair Contracting on

AUTHOR – Kim Slowey
PUBLISHED – April 2, 2019

Dive Brief:

  • California legislators are considering a new test for contractors to use when deciding if construction workers qualify as independent contractors, according to the San Francisco Chronicle, making the misclassification of workers more difficult.
  • The proposed state law would require employers to use the “ABC” method of determining whether a worker is a legitimate independent contractor or an employee. Under ABC, which was upheld by the California Supreme Court in April 2018, a worker can be classified as an independent contractor if he or she is free from the control and direction of the employer as it relates to the performance of the work; performs work that is normally outside the scope of work of the hiring contractor; and is usually engaged in the same type of work as part of the business. Through the legislation, legislators are seeking to codify the court’s decision.
  • A University of California Berkeley Labor Center study found that construction workers were one of three occupations in California routinely misclassified and not paid employee benefits due to them. Independent contractors, according to UC Berkeley, make up about 26% of the state’s construction workforce.

Dive Insight: 

Three other states – New Jersey, Massachusetts and Connecticut – also use the ABC test in their wage and hour laws, according to a report from the National Employment Law Project, and about half of all states apply it in some form in their unemployment laws. Ten states use it in relation to their labor laws for high-risk sectors like construction.
There are other tests contractors can use to determine whether a worker is an independent contractor, including one from the Internal Revenue Service that considers how the worker is paid, if the relationship with the hiring business is permanent, and whether the individual will achieve a profit or loss as part of his or her operations, among other factors.  
There are still some contractors, however, that leapfrog over the responsibility to classify workers correctly. They often count on not having to pay for things like workers’ compensation coverage, health insurance, federal and payroll taxes, figuring those savings into their bids.

(Read More)

Colorado bill set to make wage theft a felony (CO)

Posted by National Alliance for Fair Contracting on

AUTHOR- Kim Slowey
PUBLISHED – April 8, 2019

Dive Brief:

  • The Colorado General Assembly’s House Judiciary Committee approved a proposed wage theft bill that would make intentional underpayment of certain wages a criminal offense. 
  • In Colorado it is a misdemeanor to willfully short employees on their paychecks, but the new measure would make it a felony theft to intentionally underpay them by $2,000 or more. The bill includes migratory and foreign workers under the definition of employee.
  • One of the bill’s stated intentions is to provide an additional vehicle for state law enforcement to fight labor trafficking by recognizing labor as a thing of value that is subject to theft. According to the General Assembly, labor trafficking each year costs Colorado workers hundreds of millions of dollars and the loss of tens of millions of dollars to the state.  

Dive Insight: According to the Colorado Fiscal Institute, more than 500,0000 workers in the state – many of them in the construction industry – lose $750 million a year because of wage theft. The institute’s analysis shows that the most common methods employers use to short employees on their pay are:

  • Nonpayment, which includes late payments and not paying employees what they’ve earned.
  • Underpayment.
  • Misclassification of employees as independent contractors in order to avoid having to pay benefits.  
  • Unauthorized payroll deductions for expenses like transportation, materials and tools.

There has been a push by some states and cities to address wage theft and misclassification of workers as independent contractors. In California, lawmakers are considering codifying a state Supreme Court ruling that sets the parameters of which workers qualify as independent contractors. The “ABC” test asks whether the person claiming to be an independent contractor is free from the control and direction of the employer; performs work that the hiring employer doesn’t typically do; and engages in the work as part of a business.

(Read More)